The 15% corporate alternative minimum tax (CAMT) is a floor under the tax bill of very large US corporations. It charges 15% on adjusted financial statement income (AFSI), which starts with the profit on your audited financial statements. You are in scope only if your three-year average AFSI tops $1 billion ($100 million for US members of foreign-parented groups). Most mid-market companies can rule it out with a simplified test and one checkbox, as this checklist shows.
What the 15% corporate AMT actually is
Congress created the CAMT in the Inflation Reduction Act of 2022. The idea was simple: some very large, profitable corporations paid little or no federal income tax because of deductions and credits, so lawmakers set a 15% minimum tax on book income. Book income means the profit number on your applicable financial statement, usually audited GAAP statements, with tax-law adjustments.
Two things make this tax different from regular corporate tax. First, it starts from financial-statement income, not taxable income, so items like accelerated depreciation get added back in defined ways. Second, it is a minimum: you compute your regular tax, then check whether 15% of AFSI (minus a separate foreign tax credit limit) is higher. You pay whichever is more. The Joint Committee on Taxation estimated only about 150 companies would actually pay it, but far more companies have to do the paperwork to prove they are out.
The two tests that decide whether it touches you
There are two versions of the threshold test. For most US corporations, you are an "applicable corporation" if your average annual AFSI for the three tax years ending with the current year exceeds $1 billion. That is the general test.
If your company is part of a foreign-parented multinational group, there is a second test on top. The group as a whole must clear the $1 billion average, and the US members must average at least $100 million of AFSI themselves. Both prongs have to be met before the US members are in scope.
One warning that matters for growing companies: once you qualify as an applicable corporation, the status generally sticks. You do not fall back out just because one good year is followed by a bad one. So a company approaching the threshold should start tracking AFSI before it crosses, not after.
The quick rule-out most companies should use first
Here is the good news for everyone below the stratosphere. The IRS offers an optional simplified method (Notice 2025-27, issued June 2025) that lowers the bar for proving you are out. Under it, you run a streamlined AFSI calculation and compare against $800 million instead of $1 billion ($80 million instead of $100 million for the foreign-parented test).
If your three-year average comes in below those lower numbers, and you were not an applicable corporation in a prior year, you are done. You check "Yes" on Form 1120, Schedule K, Question 29(c), and you do not file Form 4626 at all. The streamlined calculation uses fewer adjustments than the full AFSI computation, which is the whole point: it lets clearly-out companies skip the heavy lifting. For a mid-market controller, this checkbox is usually the entire CAMT compliance exercise.
If you cannot rule it out: Form 4626, Part I
If the simplified method does not clear you, or you choose not to use it, the rules say you must file Form 4626. Part I of the form is the applicable-corporation determination: the full AFSI calculation with all adjustments, measured against the $1 billion (or $100 million) statutory thresholds. S corporations, regulated investment companies, and real estate investment trusts are excluded from filing entirely.
Part I is where international tax data first matters. It starts from your consolidated financial-statement income, which already bakes in your foreign subsidiaries' results, and runs it through the full list of statutory adjustments. The same CFC ownership records, foreign income figures, and foreign tax data you gather for other international work feed this calculation. If your books and your tax provision already track CFC financial-statement income for other purposes, you are partway there. The rest of Form 4626 (Parts II through V) computes the actual minimum tax for companies that are in scope.
How foreign subsidiaries feed the AFSI calculation
This is the part most generic CAMT explainers skip, and it is the part that matters to internationally active companies.
AFSI starts with consolidated financial-statement income, which already reflects your foreign subsidiaries' results, and then applies specific adjustments. The statute adjusts financial-statement income for CFC items in defined ways (for example, disregarded-entity results are fully included, while dividends between group members get sorted out to avoid double counting). The practical point: whoever owns your CFC data owns a key CAMT input. If you are already sorting out whether your foreign company is a CFC and keeping Form 5471 reporting current, that same data set supports the CAMT analysis.
The separate CAMT foreign tax credit limit
CAMT has its own foreign tax credit limit, separate from the regular-tax FTC limit. A company can be fine under the regular foreign tax credit rules and still face a different answer under CAMT. The CAMT credit is computed on Form 4626, Part IV, and it pulls the foreign tax totals from Form 1118, Schedule B. If your fact pattern involves significant foreign taxes, model both limits, not just the regular one. The CFC income and credit modeling you do for current-year inclusions is the natural starting point.
One more cross-border wrinkle: the 2026 guidance specifically addresses transfers of intangible property to foreign persons under Section 367(d). If you are restructuring where IP or functions sit, run the CAMT lens over the transaction alongside the regular-tax analysis.
What changed for 2026
Two IRS notices reshaped CAMT compliance this cycle. Notice 2025-27 (June 2025) created the $800 million/$80 million simplified method described above and waived estimated-tax underpayment penalties on CAMT for tax years beginning in 2025.
Notice 2026-7 (February 18, 2026) added taxpayer-friendly AFSI adjustments that move CAMT closer to regular tax treatment: deductible repairs on depreciable property, amortization of intangibles and domestic R&E spending, certain film and production costs, and low-cost property treated as supplies. It also clarified rules for financially troubled companies and eased an anti-abuse rule on asset transfers involving foreign corporations. Taxpayers can generally rely on the notice until new proposed regulations arrive, expected by the end of 2026.
One more 2026 development sits just outside CAMT but affects the same planning: the January 2026 OECD agreement effectively exempts US-headquartered companies from Pillar Two cross-border top-up taxes through a side-by-side safe harbor. CAMT remains the US minimum tax that applies. Our Pillar Two guide covers that parallel track.
Your 2026 CAMT compliance checklist
- Confirm your entity type. S corporations, RICs, and REITs are out entirely.
- Run the simplified method first. Compute three-year average AFSI with the streamlined adjustments and compare to $800 million ($80 million for the foreign-parented second test).
- If you are below and were never an applicable corporation: check "Yes" on Form 1120, Schedule K, Question 29(c). No Form 4626 required. Keep the calculation with the return file.
- If you are above, close to the line, or unsure: complete Form 4626, Part I with the full AFSI adjustments. Remember the status sticks once triggered.
- Pull together the international inputs: CFC financial-statement income and ownership records, foreign taxes paid (your Form 1118 data), and any Section 367(d) intangible transfers during the year.
- If in scope, complete the rest of Form 4626, including the separate CAMT foreign tax credit limit in Part IV. Do not assume the regular-tax FTC answer carries over.
- Calendar the moving pieces. The 2025 penalty waiver does not extend to 2026, so plan estimates on the new math. Watch for new proposed regulations expected by the end of 2026.
- Revisit annually. AFSI moves with your financial statements, so re-run the simplified test each year as earnings grow.
If this list raises more questions than it answers for your fact pattern, that is normal: CAMT is one of the most data-hungry provisions in the code. Our international tax team works through exactly these calculations for multinational groups.
Frequently asked questions
We are nowhere near $1 billion in revenue. Can we ignore CAMT?
Not quite, but your work is small. The test is based on financial-statement income, not revenue, and the filing rules still require a determination. In practice, run the simplified method, confirm you are under $800 million, check the Schedule K box, and file the workpaper away. That is the whole exercise for most mid-market companies.
What exactly is AFSI?
Adjusted financial statement income. Start with the net income or loss on your applicable financial statement (usually audited GAAP statements), then apply the adjustments in Section 56A and the regulations. Common adjustments involve tax depreciation, certain taxes, and pension items. The simplified method uses a shorter list of adjustments.
Do our foreign subsidiaries count toward the $1 billion?
Their financial-statement results feed into your consolidated AFSI, with specific statutory adjustments. So yes, foreign operations can push a group over the line, which is why internationally active companies should run the test even when US-only income looks modest. Foreign-parented groups face the additional $100 million US-member test ($80 million under the simplified method).
We already deal with GILTI and BEAT. Is CAMT a third tax on the same income?
It is a separate minimum-tax regime with its own base (AFSI) and its own foreign tax credit limit. It can apply on top of the regular tax system that includes those provisions. The three sets of rules use different definitions and different credit mechanics, so each needs its own calculation.
Does the estimated-tax penalty waiver still help us?
The IRS waiver of the underpayment penalty on CAMT covered tax years beginning in 2025 only. For 2026, no waiver has been announced, so build CAMT into your quarterly estimates if you might be in scope.
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